One of the results of the inaccuracies arising from traditional costing systems may be:
A) overhead costs are overapplied.
B) overhead costs are underapplied.
C) actual overheads exceed overhead applied.
D) overhead costs are underapplied AND actual overheads exceed overhead applied.

Question

Quizplus · Accepted Answer

Inaccuracies in traditional costing systems may result in the underapplication of overhead costs, meaning that actual overhead costs exceed the amount of overhead applied to products. Therefore, the correct answer is D, as it includes both choices B (underapplication of overhead costs) and C (actual overhead costs exceed overhead applied).

One of the Results of the Inaccuracies Arising from Traditional